However, he said the firm would focus on larger plots that would provide better profit margins.

'Apart from our rental return, we want to maintain the highest profit margin among major developers in Hong Kong,' Mr Chan said while announcing the firm's interim profit yesterday.

'Small pieces of land may provide high profit margins but we are not interested ... as the profit is just not enough.'

Hang Lung's last big acquisition was the $2.58 billion purchase of a West Kowloon lot. The Long Beach, a 1,829-unit residential development, is being built on the site.

Hang Lung reported a 0.8 per cent increase in net profit to $526.9 million for the six months to December, compared with a restated $522.8 million for the same period the previous year.

A drop in the company's Hong Kong property sales was offset by a 95 per cent increase in rental income from its two Shanghai properties.

CLSA senior property analyst Keith Yeung said the restatement was due to a change in accounting policy and reflected a 4 per cent drop in interim earnings.

The increase in Shanghai rental income, which jumped from $117.4 million to $228.6 million, was due to an increase in the company's Grand Gateway stake from 47 per cent to 66 per cent.

Mr Chan said the market's recovery meant the company was ready to launch its flats inventory - about 4,700 units in four residential projects.

'The inventory could be sold over three to four years,' Mr Chan said.

Hang Lung Properties will start selling 30 units at its long-awaited flagship, The HarbourSide in West Kowloon, tomorrow at about $9,000 per square foot. No timetable was given for the sale of the project's 1,122 units.

Parent company Hang Lung Group, a 62 per cent stakeholder in Hang Lung Properties, reported a 6.7 per cent net profit rise to $292.0 million from a restated $273.6 million in the previous half-year.

The interim dividend remained unchanged at 11 cents.